Ireland’s digital dilemma – this is still a tale of two economies

2 May 2015

Ireland is still failing to fully embrace the potential of the digital economy. It is a tale of two countries: one, a glittering jewel in Europe’s digital crown; the other, haunted by shuttered premises on once-bustling high streets.

Ireland’s contribution to, and dependence on, the global economy is greatly underestimated in the country. Aside from the tens of thousands of people who work in technology or are in some way linked to it, the evidence is there that knowledge and understanding of the digital economy, and e-commerce in particular, hasn’t really pervaded the general mindset or zeitgeist of the business classes.

This sobering reality was reflected recently in a report by the IE Domain Registry (IEDR) which claimed that 91pc of Irish SMEs can’t process any sales online whatsoever. Worse again, just as Google recently introduced a new mobile algorithm that favours websites that are mobile-friendly, it emerged that an alarming 53pc of Irish websites are not mobile-friendly.

According to the Second UPC Report on Ireland’s Digital Economy, published last year, the internet economy in Ireland employed the full-time equivalent of 49,000 people in 2012 and more than 150,000 new jobs could be created in the area by 2020.

The value of Ireland’s internet economy is forecast to grow from its current level of €8.4bn to an estimated €21.1bn by 2020, with consumer spending contributing 60pc (€13bn) to this figure.

Currently, €3.5bn of spending by voracious Irish digital consumers leaves the country every year, meaning Irish SMEs are letting business effectively walk out the door.

Dr Stephen Brennan, chief digital adviser to the Irish Government

Dr Stephen Brennan, chief digital adviser to the Irish Government

In a recent interview with, Dr Stephen Brennan, the chief digital adviser to the Irish Government, pointed out that, while we were having our brief conversation, some €34,000 worth of transactions would have been made online by Irish consumers, yet just €10,000 of that will remain in the country.

Think about that for a minute. If the vast majority of businesses have failed to embrace online transactions and are allowing business to just flow out of their economy then that is a huge problem.

The nature of internet commerce is that trade can flow anywhere and the European Commission is pushing to remove the barriers to cross-border trading and create a single European digital economy, but who is to blame if you are not at least being proactive in protecting the future of your business?

As the EU Commissioner for the Digital Economy & Society Günther Oettinger told the Mobile World Congress in Barcelona in March: “The digital economy is simply becoming THE economy.”

A time for joined-up thinking on digital policy

Ireland is already in the eye of the digital storm. How will an economy that still pays many suppliers by cheque deal with the onslaught of even more digital advances, such as Apple Pay, for example? Or the movement of e-commerce to occur within Facebook Messenger?

We hold many cards. Google employs 2,500 people directly in Dublin; Facebook and LinkedIn have room for 1,000 workers in each of their respective buildings in Dublin; Twitter is growing towards 300 and countless other companies like Tableau Software are ramping up their presence here enormously. Apple, which has been in Cork since the early 1980s, now employs more than 2,000 workers and is building a new €850m Athenry data centre that will be the company’s largest data centre project in Europe, providing 300 jobs during its multiple phases.

Intel, which provided a third of the Pentium processors to the world from these shores during the PC revolution of the 1990s, is investing US$5bn to move to the next generation of 14nm processors in Leixlip. Microsoft is building a massive campus in south Dublin that will generate 150 construction jobs and e-commerce giant eBay is growing rapidly in Dublin and Dundalk.

In Waterford new start-ups like NearForm are ramping up to hire 100 people and Realex, an e-payments company founded in Dublin in 2000, has just been acquired by Global Payments for €115m. Other young companies from Intercom and Datahug in Dublin to Teamwork in Cork are transforming the way that business is conducted in the 21st century. In Silicon Valley two brothers from Limerick have built Stripe, an e-payments company estimated to be worth more than US$3.5bn.

The Collison brothers

Patrick and John Collison from Limerick who went to Silicon Valley to build e-commerce company Stripe, which is currently valued at more than US$3.5bn

But how much of this chutzpah and spirit is transcending the traditional world of the SME in Ireland – the butcher, baker and candlestick maker, so to speak – who still consider themselves to be struggling in the shadow of recessionary gloom and whose battle is currently more oriented towards meeting the weekly or monthly payroll than strategising for how e-commerce can help their businesses?

Let’s be clear. There is no shortage of people who see the promise of digital. Organisations from the Irish Internet Association to chambers of commerce and even Google have all worked hard at spreading the message and tooling firms all over Ireland up for digital.

Last year, the Department of Communications launched the €5m trading online voucher scheme to enable small companies to embrace the digital economy. The target was to get 2,000 SMEs trading online over a two-year period and by all indications that plan is still on target.

But it is still a drop in the ocean and more clarity, expertise and vision are needed.

In fairness Ireland has not been idle. Some 780 schools across Ireland now have 100Mbps broadband and the Government is making a €512m investment in fibre broadband, which will cover 32pc of premises – 600,000 homes and 100,000 businesses – across Ireland. This will interlock with a commitment by the commercial telecoms industry to invest to deliver high-speed broadband access to 68pc of the premises in the State by the end of 2016, including 1.6m homes and businesses.

In recent days the Data Protection Minister Dara Murphy TD revealed that he will chair a consultative Data Forum that will focus on data privacy in the digital economy. He has invited expressions of interest from industry, society, academia, the legal profession and the public sector for focused dialogue on the challenges of the growth of the digital economy and the implications this has on personal data.

This is no doubt a welcome step and a debate on a matter that affects everyone.

But there is a need and an opportunity to ask ourselves, why are so many businesses being left behind? Why are they allowing themselves to be left behind?

We have a two-speed digital economy where world-class companies are bringing about seismic changes to the world economy while nearby businesses still rooted in the past struggle to keep the lights on.

Is there more Ireland can be doing to get the message out to businesses that their destinies lie in their own hands?

In the UK the digital economy is currently a political hot potato as election day draws closer. Could the same happen in Ireland when the general elections are called next year?

Does Ireland need a Digital Minister or department that will ensure the expertise, know-how and processes can be swiftly and coherently assimilated to help ordinary firms navigate the shifting digital straits?

If we are going to create forums to discuss personal data then we also need to create a forum to figure out how to protect the lifeblood of the Irish economy, the SME.

Ireland image via Shutterstock via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years